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Press release from GlobeNewswire (a Nasdaq OMX company)

Limelight Networks(R) Reports Fourth Quarter and Full Year 2010 Results

Monday, February 14, 2011

Limelight Networks(R) Reports Fourth Quarter and Full Year 2010 Results13:00 EST Monday, February 14, 2011TEMPE, Ariz., Feb. 14, 2011 (GLOBE NEWSWIRE) -- Limelight Networks, Inc. (Nasdaq:LLNW) today reported fourth quarter and full-year 2010 financial results. Highlights included: Record Q4 revenue of $55.2 million and full-year 2010 revenue of $183.3 million Q4 Core content delivery business revenue growth of 21% year-over-year Continued expansion of cloud-based and consulting services, which comprised 36% of Q4 revenue: Q4 Mobile revenue growth exceeded 200% year-over-year Q4 Site and application acceleration services growth exceeded 150% year over year Q4 Enterprise cloud storage growth exceeded 40% year-over-year Q4 Online video platform growth exceeded 110% year-over-year Achievement of $0.01 of non-GAAP net income per share in Q4, excluding acquisition-related income tax expense "Limelight Networks' content delivery and cloud-based services have become embedded into the fabric of the Internet, which has, through computers, tablets, smartphones and Internet-connected televisions, become embedded into the fabric of our lives. We believe that our globally distributed, high-performance computing platform, and the solutions that run on it, are unique within the technology industry, positioning us well for continued growth and market share gains in 2011. We are focused on delivering value to our customers and helping them improve the efficacy of their online businesses in a world where content and ad dollars continue to shift online, the mobile web continues its rapid growth, and enterprise IT applications continue to migrate into the cloud," said Jeff Lunsford, chairman and chief executive officer.Financial Highlights For the fourth quarter of 2010, the Company reported revenue of $55.2 million, up 64 percent from the fourth quarter 2009 and up 11 percent sequentially from Q3 2010. The Company also reported Adjusted EBITDA of $8.1 million and non-GAAP net earnings, before share-based compensation, litigation expenses, amortization of intangible assets, and acquisition-related expenses, of $1.5 million, excluding acquisition-related income tax expense, or 1 cent per share on a fully diluted basis. GAAP net loss was $6.3 million, or 6 cents per basic share. For the full year of 2010, the Company reported revenue of $183.3 million, compared to $131.7 million in 2009. The Company also reported Adjusted EBITDA of $25.8 million and non-GAAP net income, before share-based compensation, litigation expenses, amortization of intangible assets, and acquisition-related expenses, of $4.6 million or 5 cents per share on a fully diluted basis. GAAP net loss was $20.4 million, or 22 cents per basic share. A reconciliation of GAAP to non-GAAP net income is included in the tables that are attached to this earnings release. Capital investments were $8.9 million for the fourth quarter and $34.3 million for the year. The Company ended the year with no bank debt and approximately $69 million in cash and short-term marketable securities.2011 Outlook The Company anticipates first quarter revenue to be in the range of $48.0-$49.5 million and full year revenue to increase 15 to 20% over 2010 reported revenue.Financial Tables  LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except per share data)        December 31, December 31,   20102009  (Unaudited)  ASSETS     Current Assets:     Cash and cash equivalents  $ 56,741  $ 89,509 Marketable securities  12,009  64,870 Accounts receivable, net of reserves of $7,243 and $9,226 at December 31, 2010 and December 31, 2009  41,940  26,363 Income taxes receivable  721  617 Prepaid expenses and other current assets  9,628  9,654 Total current assets  121,039  191,013 Property and equipment, net  54,407  35,524 Marketable securities, less current portion  1,755  12 Deferred tax asset, non-current  718  -- Goodwill  94,364  619 Other intangible assets, net  19,406  370 Other assets  6,951  8,132 Total assets  $ 298,640  $ 235,670      LIABILITIES AND STOCKHOLDERS' EQUITY     Current Liabilities:     Accounts payable  $ 12,236  $ 5,144 Deferred revenue, current portion  6,877  12,199 Capital lease obligation, current portion  1,049  -- Other current liabilities  21,608  14,140 Total current liabilities  41,770  31,483 Deferred revenue, less current portion  --  1,377 Capital lease obligation, less current portion  1,750  -- Deferred income tax, less current portion  598  10 Other long term liabilities  21  -- Total liabilities  44,139  32,870 Commitments and contingencies  --  -- Stockholders' equity:     Convertible preferred stock, $0.001 par value; 7,500 shares authorized; 0 shares issued and outstanding  --  -- Common stock, $0.001 par value; 150,000 shares authorized; 100,068 and 85,011 shares issued and      outstanding at December 31, 2010 and December 31, 2009, respectively  100  85 Additional paid-in capital  380,338  308,537 Accumulated other comprehensive income   329  93 Accumulated deficit  (126,266)  (105,915) Total stockholders' equity  254,501  202,800 Total liabilities and stockholders' equity  $ 298,640  $ 235,670        LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)                              Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201020102009200920102009               Revenues  $ 55,243  $ 49,803  $ 33,625  $ 32,530  $ 183,327  $ 131,663 Costs and operating expenses             Cost of revenues * †  29,966  27,946  22,167  20,907  102,719  85,623 General and administrative * †  11,621  10,393  10,066  7,032  42,119  36,479 Sales and marketing *  13,323  12,724  8,672  8,060  46,752  32,587 Research & development *  5,141  4,491  2,059  2,024  15,755  7,937 Provision for litigation  --  --  --  --  --  (65,645) Total costs and operating expenses  60,051  55,554  42,964  38,023  207,345  96,981               Operating (loss) income   (4,808)  (5,751)  (9,339)  (5,493)  (24,018)  34,682               Interest expense  (64)  (6)  (5)  (11)  (77)  (39) Interest income  147  210  295  330  914  1,345 Other (expense) income   (105)  (120)  (146)  15  (222)  (14) (Loss) income before taxes  (4,830)  (5,667)  (9,195)  (5,159)  (23,403)  35,974 Income tax expense (benefit)   1,518  287  531  61  (3,052)  1,084 Net (loss) income   $ (6,348)  $ (5,954)  $ (9,726)  $ (5,220)  $ (20,351)  $ 34,890               Net (loss) income per share:             Basic  $ (0.06)  $ (0.06)  $ (0.11)  $ (0.06)  $ (0.22)  $ 0.41 Diluted  $ (0.06)  $ (0.06)  $ (0.11)  $ (0.06)  $ (0.22)  $ 0.40               Shares used in per share calculations:             Basic  99,557  98,634  84,770  84,489  94,300  84,202 Diluted  99,557  98,634  84,770  84,489  94,300  87,972               * Includes share-based compensation (see supplemental table for figures)                       † Includes depreciation and amortization (see supplemental table for figures)                        LIMELIGHT NETWORKS, INC.SUPPLEMENTAL FINANCIAL DATA(In thousands)(Unaudited)                              Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201020102009200920102009Supplemental financial data (in thousands):            Share-based compensation:             Cost of revenues  $ 614  $ 645  $ 642  $ 638  $ 2,441  $ 2,414 General and administrative  1,691  1,779  1,801  1,805  6,881  7,556 Sales and marketing  1,234  1,311  1,236  1,293  5,023  4,970 Research and development  804  819  648  633  3,056  2,523 Total share-based compensation  $ 4,343  $ 4,554  $ 4,327  $ 4,369  $ 17,401  $ 17,463              Depreciation and amortization:             Network-related depreciation  $ 6,387  $ 5,878  $ 5,352  $ 6,018  $ 22,367  $ 24,051 Other depreciation and amortization  497  680  619  568  2,460  2,259 Amortization of intangible assets  1,458  1,354  33  59  3,899  92 Total depreciation and amortization  $ 8,342  $ 7,912  $ 6,004  $ 6,645  $ 28,726  $ 26,402               Net (decrease) increase in cash, cash equivalents             and marketable securities  $ (2,169)  $ (11,166)  $ 1,561  $ (11,497)  $ (83,886)  $ (20,265)              End of period statistics:                           Approximate number of active customers   1,824  1,780  1,370  1,370  1,824  1,370 Number of employees  689  660  328  321  689  328                LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)                                    Three Months EndedTwelve Months Ended                    December 31,September 30,December 31,September 30,December 31,December 31,    201020102009200920102009                                Cash flows from operating activities:               Net (loss) income     $ (6,348)  $ (5,954)  $ (9,726)  $ (5,220)  $ (20,351)  $ 34,890 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:               Depreciation and amortization    8,342  7,912  6,004  6,645  28,726  26,402 Share-based compensation    4,343  4,554  4,327  4,369  17,401  17,463 Deferred income taxes    (807)  (71)  --  --  (997)  -- Income tax expense (benefit) related to business acquisition    1,899  --  --  --  (3,869)  -- Provision for litigation     --  --  --  --  --  (65,645) Loss (gain) on foreign currency transactions    22  159  20  7  17  201 Loss on sale of property and equipment    27  58  --  --  179  -- Accounts receivable (recovery) charges    (16)  585  774  329  2,326  5,013 Accretion of marketable securities    85  (50)  89  (298)  359  (366) Changes in operating assets and liabilities:               Accounts receivable    (2,857)  (5,089)  555  (1,648)  (8,363)  2,348 Prepaid expenses and other current assets    (306)  539  (516)  (1,475)  832  (1,863) Income taxes receivable    141  (69)  (424)  (159)  299  (600) Other assets    611  62  917  (4,152)  1,617  (7,396) Accounts payable    1,875  (74)  (6)  244  842  (5,204) Deferred revenue    (2,588)  (1,913)  (1,506)  (291)  (6,878)  (3,591) Other current liabilities    2,454  755  4,875  358  2,951  (1,361) Other long term liabilities    (20)  41  --  --  --  -- Net cash provided by (used in) operating activities    6,857  1,445  5,383  (1,291)  15,091  291                Cash flows from investing activities:               Purchases of property and equipment    (8,903)  (11,675)  (3,759)  (10,586)  (34,308)  (20,407) Purchase of marketable securities    (1,039)  (8,715)  (25,500)  (32,905)  (28,509)  (71,235) Sale of marketable securities    7,516  12,405  10,900  2,000  81,101  43,300 Acquisition of businesses, net of cash acquired    --  (2,622)  --  --  (66,529)  22 Net cash (used in) provided by investing activities    (2,426)  (10,607)  (18,359)  (41,491)  (48,245)  (48,320)                Cash flows from financing activities:               Payment on capital lease obligations    (409)  --  --  --  (409)  -- Payment of employee tax withholdings related to restricted stock    (948)  --  (286)  --  (1,579)  (753) Proceeds from exercise of stock options    1,486  335  34  72  1,948  274 Net cash provided by (used in) financing activities    129  335  (252)  72  (40)  (479) Effect of exchange rate changes on cash    (48)  285  290  (5)  426  (163)Net increase (decrease) in cash and cash equivalents    4,512  (8,542)  (12,938)  (42,715)  (32,768)  (48,671)Cash and cash equivalents, beginning of period     52,229  60,771  102,447  145,162  89,509  138,180Cash and cash equivalents, end of period    $ 56,741  $ 52,229  $ 89,509  $ 102,447  $ 56,741  $ 89,509                Use of Non-GAAP Financial Measures To evaluate our business, we consider and use Non-GAAP net income (loss) and Adjusted EBITDA as a supplemental measure of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income (loss) to be an important indicator of overall business performance because it allows us to illustrate the impact of the effects of share-based compensation, litigation expenses, provision for litigation, amortization of intangibles and acquisition related expenses. We define EBITDA as GAAP net income (loss) before interest income, interest expense, other income and expense, provision for income taxes and, depreciation and amortization. We believe that EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define Adjusted EBITDA as EBITDA adjusted for operational expenses that we do not consider reflective of our ongoing operations. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. We also believe use of Adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period. In addition, it should be noted that our performance-based executive officer bonus structure is tied closely to our performance as measured in part by certain non-GAAP financial measures. The terms Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are not defined under United States generally accepted accounting principles, or United States GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with United States GAAP. Our Non-GAAP net income (loss), EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income (loss), EBITDA and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with United States GAAP. Some of these limitations include, but are not limited to: EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; they do not reflect changes in, or cash requirements for, our working capital needs; they do not reflect the cash requirements necessary for litigation costs; they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur; they do not reflect income taxes or the cash requirements for any tax payments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and other companies may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. We compensate for these limitations by relying primarily on our GAAP results and using Non-GAAP net income (loss) and Adjusted EBITDA only as supplemental support for management's analysis of business performance. Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are calculated as follows for the periods presented in thousands:Reconciliation of Non-GAAP Financial Measures  In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures.  LIMELIGHT NETWORKS, INC.Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)(In thousands)(Unaudited)                              Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201020102009200920102009               GAAP net (loss) income   $ (6,348)  $ (5,954)  $ (9,726)  $ (5,220)  $ (20,351)  $ 34,890               Provision for litigation   --  --  --  --  --  (65,645) Share-based compensation  4,343  4,554  4,327  4,369  17,401  17,463 Litigation defense expenses  22  9  827  273  2,149  5,412 Acquisition related expenses  169  345  1,481  --  1,527  1,481 Amortization of intangible assets  1,458  1,354  33  59  3,899  92               Non-GAAP net (loss) income   $ (356)  $ 308  $ (3,058)  $ (519)  $ 4,625  $ (6,307)                LIMELIGHT NETWORKS, INC.Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA(In thousands)(Unaudited)                              Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201020102009200920102009               GAAP net (loss) income   $ (6,348)  $ (5,954)  $ (9,726)  $ (5,220)  $ (20,351)  $ 34,890               Depreciation and amortization  8,342  7,912  6,004  6,645  28,726  26,402 Interest expense  64  6  5  11  77  39 Interest and other income (expense)  (42)  (90)  (149)  (346)  (692)  (1,331) Income tax (benefit) expense   1,518  287  531  61  (3,052)  1,084               EBITDA  3,534  2,161  (3,335)  1,151  4,708  61,084               Provision for litigation  --  --  --  --  --  (65,645) Share-based compensation  4,343  4,554  4,327  4,369  17,401  17,463 Litigation defense expenses  22  9  827  273  2,149  5,412 Acquisition related expenses  169  345  1,481  --  1,527  1,481               Adjusted EBITDA   $ 8,068  $ 7,069  $ 3,300  $ 5,793  $ 25,785  $ 19,795              Conference Call At approximately 4:05 p.m. EST (1:05 p.m. PST), management will host a quarterly conference call for investors. Investors can access this call toll-free at 1-877-388-8480 within the United States or +1 678-809-1592 outside of the U.S. The conference call will also be audiocast live from http://www.llnw.com and a replay will be available following the call from the Company's website.Safe-Harbor Statement This press release contains forward-looking statements concerning, among other things, the outlook for the Company's revenues, net loss and stock-based compensation expenses, customer growth, market growth, pricing pressures, expansion into additional market segments, product and services improvements, the integration of acquired businesses and litigation and acquisition related expenses. Forward-looking statements represent the current judgment and expectations of Limelight Networks and are not guarantees and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks and uncertainties discussed in the Company's Annual Report on Form 10K and other filings with the Securities and Exchange Commission and the final review of the results and amendments and preparation of quarterly financial statements, including consultation with our outside auditors. Accordingly, readers are cautioned not to place undue reliance on any forward-looking statements. The Company assumes no duty or obligation to update or revise any forward-looking statements for any reason.About Limelight Networks, Inc. Limelight Networks, Inc. (Nasdaq:LLNW) provides solutions that enable business and technology decision makers to profit from the shift of content and advertising to the online world, the explosive growth of mobile and connected devices, and the migration of IT applications and services into the cloud. Over 1800 customers worldwide use Limelight's massively scalable software services to engage audiences, enhance brand presence, analyze viewer preferences, optimize advertising, manage and monetize digital assets, and ultimately build stronger customer relationships. For more information, please visit http://www.limelightnetworks.com or follow us on Twitter at www.twitter.com/llnw. Copyright (C) 2011 Limelight Networks, Inc. All rights reserved. EyeWonder is a trademark of Limelight Networks, Inc. All product or service names are the property of their respective owners.CONTACT: Paul Alfieri of Limelight Networks, Inc. +1-646-875-8835, palfieri@llnw.com